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© Analysys Mason Limited 2014

Sub-Saharan Africa telecoms market: trends and forecasts 2013 –2018

Research Forecast Report

Sub-Saharan Africa telecoms market: trends and

forecasts 2013 –2018

July 2014

Mpho Moyo, William Hare and Alexandra Rehak


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About this report

This report provides:

a 5-year forecast of more than 90 mobile and fixed

telecoms KPIs for the Sub-Saharan Africa region as a

whole and for 7 key countries

an in-depth analysis of the trends, drivers and

forecast assumptions for each type of mobile and fixed

service, and for key countries

an overview of operator strategies and country-specific

topics, with major trends, similarities and differences

highlighted through cross-country comparison

a summary of results, key implications and

recommendations for mobile and fixed operators.

Our forecasts are informed by on-the-ground regional market

experts from our topic-led Research programmes and

Consulting division, as well as external interviews.

We base our forecasts on robust historical data and current

market information, unique in-house modelling tools, and arigorous methodology (reconciliation of different sources,

standard definitions, top-down and bottom-up modelling).

For the complete data set and our data series definitions, see

the accompanying Excel file at

www.analysysmason.com/SSA-forecast-Jul2014 .

Geographical

coverage

Major KPIs

Regions modelled:

Sub-Saharan Africa

Countries modelledindividually

Ghana

Kenya

Nigeria

South Africa

Sudan

Tanzania

Uganda

Connections Revenue

Mobile

Handset, mobilebroadband1, M2M2

Prepaid, contract

2G, 3G, 4G

Smartphone,non-smartphone

Fixed

Voice, broadband,IPTV, dial-up

Narrowband voice,VoBB

DSL, FTTH/B,cable, BFWA

Mobile

Service3, retail

Prepaid, contract

Handset, mobilebroadband1, M2M2

Handset voice,messaging, data

Fixed

Service3, retail

Voice, broadband,IPTV, dial-up, BNS

DSL, FTTH/B,cable, BFWA

ARPU

Voice traffic Mobile:

SIMs, handset

Prepaid, contract

Handset voice, data

Fixed and mobile

Outgoing minutes,MoU

1 Includes USB modem, and mid- and large-screen, but not handset-based data.

2 M2M connections and revenue figures include mobile services only.

3 Service revenue is the sum of retail and wholesale revenue.

Figure 1: Summary of report coverage [Source: Analysys Mason, 2014]

2

http://www.analysysmason.com/SSA-forecast-Jul2014http://www.analysysmason.com/SSA-forecast-Jul2014http://www.analysysmason.com/SSA-forecast-Jul2014http://www.analysysmason.com/SSA-forecast-Jul2014http://www.analysysmason.com/SSA-forecast-Jul2014http://www.analysysmason.com/SSA-forecast-Jul2014


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Contents [1]

8. Executive summary

9. Growing demand for mobile voice and data, and growing smartphone

penetration offer significant opportunities in Sub-Saharan Africa

10. Handset data and mobile voice revenue will contribute 90% of SSA’s

retail revenue growth in 2013 –2018, each growing by USD7.4 billion

11. South Africa is the largest telecoms market in SSA, accounting for 27%

of the region’s telecoms retail revenue in 2018

12. Forecast revision: Our SSA revenue forecast revisions reflect lower

mobile voice revenue and higher demand for handset data services

13. Key trends, drivers and assumptions for the mobile market

14. Key trends, drivers and assumptions for the fixed market

15. Key implications and recommendations

16. Regional forecasts and cross-country comparison

17. Geographical coverage: We model the seven largest markets, which will

account for 62% of total SSA telecoms service revenue in 2018

18. Market context: The two most-populated countries – Nigeria and South

Africa – generated 51% of the region’s telecoms retail revenue in 2013

19. Fixed and mobile penetration: Mobile handset growth and fixed

broadband growth will be solid in SSA, while fixed voice penetration will

decline

20. Mobile penetration: SIM penetration growth will continue in the seven

major markets as affordability and coverage increase

21. Mobile connections: 2G will remain the predominant technology in SSA,

while LTE will account for only 3% of mobile connections in 2018

22. Smartphones and LTE: Smartphones will account for 26% of handsets

in SSA by 2018, as device prices decline and users upgrade

23. Mobile ARPU: Decline will slow in most SSA markets, thanks to almost

10% annual growth in handset data ARPU

24. Fixed services: Africa’s small fixed broadband market will increasingly

lag behind the non-handset mobile broadband market

25. Fixed broadband: Household fixed broadband penetration in SSA varies

significantly by country, and South Africa is well ahead of the others

26. Revenue and ARPU: Mobile voice and handset data will drive revenue

growth through 2018, while mobile data will help maintain mobile ARPU

27. Service revenue: South Africa’s share will decline slightly, reflecting the

relative maturity of its market

28. Revenue mix: Mobile revenue will continue to dominate the revenue

mix, and only South Africa will have a significant level of fixed revenue

29. Individual country forecasts

30. Ghana: Service revenue will reach GHS3.6 billion (USD1.9 billion) in

2018, driven by handset data, while traditional services remain flat

31. Ghana: Key trends, drivers and assumptions

32. Ghana – mobile: Fines imposed by the regulator for poor service quality

are likely to drive increased operator investment

33. Ghana – fixed: The fixed market is well behind the mobile market, but

fixed broadband growth will be steady, driven by BFWA

34. Kenya: Service revenue will reach KES205.4 billion (USD2.5 billon) in

2018, driven by handset and non-handset mobile broadband

35. Kenya: Key trends, drivers and assumptions

36. Kenya – mobile: Kenya is the leading country in Africa in terms of mobile

money services, which have driven mobile data growth

Slide no. Slide no.

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Contents [2]

37. Kenya – fixed: We forecast slow but steady growth in fixed broadband,

driven by innovative alternative providers like Zuku

38. Nigeria: Service revenue will reach NGN2.1 trillion (USD13.1 billion) in

2018 because of handset data growth

39. Nigeria: Key trends, drivers and assumptions

40. Nigeria – mobile: Nigeria is the largest mobile market in SSA in terms of

subscriber numbers, but not revenue

41. Nigeria – fixed: The fixed broadband market is underdeveloped because

no operator has reached scale

42. South Africa: Telecoms service revenue will reach ZAR137.7 billion

(USD16.9 billion) in 2018, driven by solid growth in handset data

43. South Africa: Key trends, drivers and assumptions

44. South Africa – mobile: South Africa has the highest smartphone

penetration in SSA

45. South Africa – fixed: The planned national broadband plan and merger

between Neotel and Vodacom will stimulate the market

46. Sudan: Telecoms revenue will reach SDG7.1 billion (USD2.1 billion), as

mobile data grows but mobile voice remains predominant

47. Sudan: Key trends, drivers and assumptions

48. Sudan – mobile: Negative macroeconomic conditions in Sudan may

threaten future growth of the mobile market

49. Sudan – fixed: The fixed broadband market lacks competition and Canar

Telecom is planning to exit the market

50. Tanzania: Service revenue will reach TZS3.4 trillion (USD2.1 billion) in

2018, predominantly driven by mobile voice services

51. Tanzania: Key trends, drivers and assumptions

52. Tanzania – mobile: MTR cuts will put mobile ARPU under pressure;

growth in handset data ARPU will offset the decline in voice ARPU

53. Tanzania – fixed: Government investment in a national broadband

network is expected to stimulate growth of fixed broadband

54. Uganda: Mobile handset data and fixed broadband will drive service

revenue to UGX3.8 trillion (USD1.6 billion) by 2018

55. Uganda: Key trends, drivers and assumptions

56. Uganda – mobile: Competition is set to intensify as operators

consolidate

57. Uganda – fixed: Mobile services are preferable to fixed because they

offer wider coverage at a lower cost

58. About the authors and Analysys Mason

59. About the authors

60. About Analysys Mason

61. Research from Analysys Mason

62. Consulting from Analysys Mason

Slide no. Slide no.

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List of figures [1]

Figure 1: Summary of report coverage

Figure 2: Telecoms retail revenue by service type and total service revenue(retail and wholesale), Sub-Saharan Africa, 2009 –2018

Figure 3: Telecoms retail revenue growth by service type, Sub-Saharan

Africa, 2013 –2018

Figure 4: CAGRs for fixed and mobile retail revenue (2013 –2018) and

market size by total retail revenue (2018), by country, Sub-

Saharan Africa

Figure 5: Telecoms retail revenue by service type and total service

revenue, previous and new forecasts, Sub-Saharan Africa, 2013

and 2018

Figure 6: Summary of key drivers and assumptions for the mobile market,Sub-Saharan Africa

Figure 7: Summary of key drivers and assumptions for the fixed market,

Sub-Saharan Africa

Figure 8: Mobile connections by technology generation and fixed

broadband household penetration, by country, 2018

Figure 9: Metrics for Sub-Saharan Africa and the seven SSA countries

modelled individually, 2013

Figure 10: Penetration rate by service type, Sub-Saharan Africa, 2009 –2018

Figure 11: Connections by service type, and growth rates, Sub-Saharan

Africa, 2013 –2018Figure 12: Active mobile SIM penetration by country (excluding M2M),

Sub-Saharan Africa, 2009 –2018

Figure 13: Mobile connections by technology generation (excluding M2M),

and 3G and 4G’s share of connections, Sub-Saharan Africa,

2009 –2018

Figure 14: Smartphones as a percentage of handsets, and LTE’s share of

total connections (excluding M2M), Sub-Saharan Africa, 2013 and2018

Figure 15: Mobile ARPU by country, Sub-Saharan Africa, 2009 –2018

Figure 16: Fixed broadband connections by type, and fixed voice, IPTV and

mobile broadband connections, Sub-Saharan Africa, 2009 –2018

Figure 17: Fixed broadband penetration of households by country,

Sub-Saharan Africa, 2009 –2018

Figure 18: Telecoms retail revenue by service type, fixed voice and fixed

broadband ASPU, and mobile ARPU, Sub-Saharan Africa, 2009 –

2018

Figure 19: Telecoms retail revenue by service type, total service revenueand growth rates, Sub-Saharan Africa, 2013 –2018

Figure 20: Telecoms service revenue by country, Sub-Saharan Africa, 2013


Figure 22: Telecoms retail revenue by service type, and total service

revenue (retail and wholesale), by country, Sub-Saharan Africa,

2013 and 2018

Figure 23: Telecoms retail revenue by service type and total service revenue

(retail and wholesale), Ghana, 2009 –2018

Figure 24: Telecoms retail revenue by service type, total service revenue

and growth rates, Ghana, 2013 –2018Figure 25: Connections by type, and growth rates, Ghana, 2013 –2018

Figure 26: Summary of key forecast drivers and assumptions, Ghana

Figure 27: Mobile, smartphone and 4G penetration rates, Ghana, 2009 –2018

Figure 28: ARPU rates by type, Ghana, 2009 –2018

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List of figures [2]

Figure 29: Fixed penetration rates by service type, Ghana, 2009 –2018

Figure 30: Fixed ASPU rates by service type, Ghana, 2009 –2018


(retail and wholesale), Kenya, 2009 –2018


and growth rates, Kenya, 2013 –2018

Figure 33: Connections by type, and growth rates, Kenya, 2013 –2018

Figure 34: Summary of key drivers and assumptions, Kenya

Figure 35: Mobile, smartphone and 4G penetration rates, Kenya, 2009 –2018

Figure 36: ARPU rates by type, Kenya, 2009 –2018

Figure 37: Fixed penetration rates by service type, Kenya, 2009 –2018Figure 38: Fixed ASPU rates by service type, Kenya, 2009 –2018


(retail and wholesale), Nigeria, 2009 –2018


and growth rates, Nigeria, 2013 –2018

Figure 41: Connections by type, and growth rates, Nigeria, 2013 –2018

Figure 42: Summary of key drivers and assumptions, Nigeria

Figure 43: Mobile, smartphone and 4G penetration rates, Nigeria, 2009 –

2018

Figure 44: ARPU rates by type, Nigeria, 2009 –2018Figure 45: Fixed penetration rates by service type, Nigeria, 2009 –2018

Figure 46: Fixed ASPU rates by service type, Nigeria, 2009 –2018


(retail and wholesale), South Africa, 2009 –2018


and growth rates, South Africa, 2013 –2018Figure 49: Connections by type, and growth rates, South Africa, 2013 –2018

Figure 50: Summary of key drivers and assumptions, South Africa

Figure 51: Mobile, smartphone and 4G penetration rates, South Africa,

2009 –2018

Figure 52: ARPU rates by type, South Africa, 2009 –2018

Figure 53: Fixed penetration rates by service type, South Africa, 2009 –2018

Figure 54: Fixed ASPU rates by service type, South Africa, 2009 –2018


(retail and wholesale), Sudan, 2009 –2018


and growth rates, Sudan, 2013 –2018

Figure 57: Connections by type, and growth rates, Sudan, 2013 –2018

Figure 58: Summary of key drivers and assumptions, Sudan

Figure 59: Mobile, smartphone and 4G penetration rates, Sudan, 2009 –2018

Figure 60: ARPU rates by type, Sudan, 2009 –2018

Figure 61: Fixed penetration rates by service type, Sudan, 2009 –2018

Figure 62: Fixed ASPU rates by service type, Sudan, 2009 –2018


(retail and wholesale), Tanzania, 2009 –2018Figure 64: Telecoms retail revenue by service type, total service revenue

and growth rates, Tanzania, 2013 –2018

Figure 65: Connections by type, and growth rates, Tanzania, 2013 –2018

Figure 66: Summary of key drivers and assumptions, Tanzania

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List of figures [3]

Figure 67: Mobile, smartphone and 4G penetration rates, Tanzania, 2009 –

2018Figure 68: ARPU rates by type, Tanzania, 2009 –2018

Figure 69: Fixed penetration rates by service type, Tanzania, 2009 –2018

Figure 70: Fixed ASPU rates by service type, Tanzania, 2009 –2018


(retail and wholesale), Uganda, 2009 –2018


and growth rates, Uganda, 2013 –2018

Figure 73: Connections by type, and growth rates, Uganda, 2013 –2018

Figure 74: Summary of key drivers and assumptions, Uganda

Figure 75: Mobile, smartphone and 4G penetration rates, Uganda, 2009 –

2018

Figure 76: ARPU rates by type, Uganda, 2009 –2018

Figure 77: Fixed penetration rates by service type, Uganda, 2009 –2018

Figure 78: Fixed ASPU rates by service type, Uganda, 2009 –2018

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Sub-Saharan Africa telecoms market: trends and forecasts 2013 –2018 8

Executive summary

Regional forecasts and cross-country comparison

Individual country forecasts

About the authors and Analysys Mason


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Growing demand for mobile voice and data, and growing smartphone

penetration offer significant opportunities in Sub-Saharan Africa

The telecoms service market in Sub-Saharan Africa (SSA)

was worth USD49 billion in 2013, of which mobile servicesaccounted for 86.5%. South Africa is the largest market in the

region, with telecoms service revenue of USD14.94 billion in

2013. SSA is growing faster than any other regional market,

but accounted for only 2.9% of worldwide telecoms revenue

in 2013, increasing to 3.6% by 2018.

Telecoms service revenue will grow at a 6% CAGR during

2013 –2018 (mobile at 6.7% and fixed at 1.0%) to reach

USD65.3 billion in 2018.

Several trends will drive revenue growth in the next 5 years.

Under-penetration of fixed and mobile data services

represents a growth opportunity for service providers.

However, affordability and coverage are major challenges.

Significant structural and commercial barriers to will

continue to restrain fixed services growth in particular.

An increase in mobile Internet users will drive growth of

mobile handset data revenue at a 19.6% CAGR; this is

largely driven by smartphones, which increase from 12%

of handsets in 2013 to 26% in 2018 (a CAGR of 25.2%).

Mobile voice will continue to be the largest component of

the market, as new market entrants and MTR reductions

drive price competition and increased traffic.


(retail and wholesale), Sub-Saharan Africa, 2009 –2018 [Source: AnalysysMason, 2014]

9

Service revenue (retail and wholesale)

Business network servicesMobile broadband

Fixed broadband and IPTVMobile handset data

Fixed voice and narrowbandMobile messaging

Mobile M2MMobile voice

0

10

20

30

40

50

60

70

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

2 0 1 6

2 0 1 7

2 0 1 8

R e v e n u e

( U S D

b i l l i o n )


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0

2

4

6

810

12

14

16

18

20

M o b i l e h a n d s e t d a t a

M o b i l e v

o i c e

M o b i l e b r o a d b

a n d

B u s i n e s s

n e t w o r k s e r v

i c e s

M o b i l e M

2 M

F i x e d b r o a d b

a n d

a n d I P T V

M o b i l e m e s s a

g i n g

F i x e d v o i c e

a n d n a r r o w b

a n d

T o t a l r

e t a i l

R e v e n u e g r o w t h 2 0 1

3 – 2 0 1 8 ( U S D

b i l l i o n )

Handset data and mobile voice revenue will contribute 90% of SSA’s retail

revenue growth in 2013 –2018, each growing by USD7.4 billion

Retail telecoms revenue (excluding wholesale) in SSA will

grow by USD16.5 billion during 2013 –2018, to reachUSD59.9 billion (a 6.7% CAGR).

Mobile voice revenue remains the primary contributor to

revenue in the forecast period, reaching USD35.6 billion in

2018 (CAGR of 4.7%). Growth will come from higher traffic

and connections growth, counterbalanced by lower voice

ARPU because of competition and MTR reductions.

Mobile handset data revenue is growing rapidly (CAGR of

19.6%); it will add slightly more revenue than mobile voice(just over USD7.4 billion), and will account for 19.1% of

retail revenue by 2018. Nigeria and South Africa will

account for 63.2% of handset data revenue by 2018.

Non-handset mobile broadband revenue will contribute a

much smaller amount, adding USD1.4 billion during 2013 –

2018, to reach USD2.7 billion of revenue in 2018.

Fixed broadband will be a significant driver of fixed retail

revenue, reaching USD1.2 billion in 2018 (CAGR of 8.7%),

but the fixed share of overall revenue is extremely low.

SSA’s fixed services market is underdeveloped.

Household penetration is currently very low, at 2%.

National broadband plans and new terrestrial backbones

should help to increase coverage and reduce costs.

Figure 3: Telecoms retail revenue growth by service type, Sub-Saharan

Africa, 2013 –2018 [Source: Analysys Mason, 2014]

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1.6

2.3

12.216.2

18.1

2.0

1.4

–2%

0%

2%

4%

6%

8%

10%

0% 2% 4% 6% 8% 10% 12% F i x e d r e t a i l r e v e n u e g r o w t h

( C A G R

2 0 1 3 – 2 0 1 8 )

Mobile retail revenue growth (CAGR 2013 –2018)

ubble size and number = retail revenue (USD billion) in 2018

South Africa is the largest telecoms market in SSA, accounting for 27% of

the region’s telecoms retail revenue in 2018

South Africa is the largest market in SSA (retail revenue was

USD13.9 billion in 2013 accounting for 31.8% of regionalretail revenue in 2013, and 27.1% in 2018). Nigeria is the

second-largest, growing to 20.4% of regional retail revenue in

2018. Ghana, Kenya, Sudan, Tanzania and Uganda account

for around 15% of regional revenue throughout the forecast

period. The 47 African countries not modelled individually

contributed 33.3% of retail revenue in 2013.

All markets will show mobile revenue growth through 2018,

although Nigeria and South Africa will grow more slowly than

the regional average. Mobile handset data will be the maindriver of revenue growth, as smartphones and improved 3G

coverage and 4G roll-outs in some countries stimulate mobile

Internet demand. Potential new market entrants in Ghana,

Sudan and Uganda will further spur competition.

Mobile voice services will face increasing pressure from

regulatory changes – MTR cuts, for example – which usually

translate into reduced retail prices and flat on/off-net tariff

offers. Nigeria, South Africa and Tanzania are at high risk of

MTR-associated mobile voice revenue decline.

Fixed broadband revenue growth will offset the decline in

fixed voice revenue in most countries. Fixed retail revenue

will grow everywhere but Sudan, but will be relatively flat in

South Africa, Nigeria and Tanzania. Ghana, Kenya and

Uganda all show high fixed growth, from a very low base.

Figure 4: CAGRs for fixed and mobile retail revenue (2013 –2018) and market

size by total retail revenue (2018), by country, Sub-Saharan Africa [Source: Analysys Mason, 2014]

11

Ghana Kenya Nigeria South Africa Sudan

Tanzania Uganda


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Forecast revision: Our SSA revenue forecast revisions reflect lower mobile

voice revenue and higher demand for handset data services

We review our forecasts every 6 months in light of market

developments and published results from operators andregulators in SSA.

We have revised down our current (2013) and forecast

mobile voice revenue figures. In our revised forecast, mobile

voice revenue was USD28.3 billion in 2013 (down from

USD29.6 billion in our previous forecast), and will reach

USD35.6 billion in 2018 (down from USD38.8 billion).

Mobile voice revenue will be lower than previously

anticipated, because of competitive and commercialfactors. These include price competition supported by

MTR cuts in South Africa, Nigeria and Tanzania that will

put downward pressure on mobile voice ARPU; and

increased bundling and commoditisation of voice services

as data becomes more accessible and important.

Conversely, we have revised up our mobile non-messaging

data revenue, particularly for handset data. Our revisions put

mobile handset data revenue at USD5.1 billion in 2013 (up

from USD4.5 billion previously), growing to USD12.5 billion in2018 (up by 50% on the USD8.5 billion previously forecast).

Increased (higher than previously forecasted) demand for

smartphones (and high-spec feature phones), and

improved high-speed mobile network quality and

coverage, are driving handset data usage and spend.

Figure 5: Telecoms retail revenue by service type and total service revenue,

previous and new forecasts, Sub-Saharan Africa, 2013 and 2018 [Source: Analysys Mason, 2014]

12

Mobile voice Mobile M2M

Mobile messaging Fixed voice and narrowband

Mobile handset data Fixed broadband and IPTV

Mobile broadband Business network services

Service revenue (retail and wholesale)

0

10

20

30

40

50

60

70

Previous New Previous New

2013 2018

R e v e n u e

( U S D

b i l l i o n )


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Forecast trend (2013 –2018) Drivers and assumptions

Mobile handset data revenue will be

the primary driver of mobile

revenue growth, growing from

USD5.1 billion to USD12.5 billion Mobile handset data revenue will be the main driver of telecoms retail revenue growth. It will be an

increasingly important component of total retail revenue, as well as the fastest-growing category,

jumping from 11.8% of retail revenue in 2013 to 19.1% in 2018. Underlying drivers are greater

availability of lower-priced devices (low-end smartphones and high-end feature phones); improved 3G

service quality; 4G coverage across major markets; growth of bundled and other innovative mobile data

offers targeting the prepaid market; and increasing take-up of over-the-top (OTT) services, mobile

financial services and mobile Internet services.

Mobile voice ARPU will continue ona downward trend, from USD4.3 in

2013 to USD3.5 in 2018; messaging

ARPU is also trending downward Mobile voice ARPU will decline at a –3.9% CAGR during 2013 –2018. The imposition of MTR cuts

(including asymmetric rates in many markets) will drive competition and leave room for lower-priced

offers and flat on-net and off-net voice tariffs. Nigeria and South Africa will have the greatest mobile

voice revenue decline associated with MTR cuts during the forecast period.

Mobile voice will remain a critical service, and both connections and traffic will grow, but there will be

greater commoditisation and bundling of voice minutes, and some OTT voice substitution. The impact of

OTT on messaging revenue and ARPU is already high, and this pressure will continue.

Smartphone penetration of the

handset base will increase from

12% in 2013 to 26% in 2018

Vendors are developing low-cost handsets that will increase affordability, driving penetration. Reducing

the cost of access is a major focus for operators.

Operators are driving adoption through targeted campaigns, the introduction of low cost-handsets,

handset subsidies and by reducing in the cost of mobile data.

LTE will be a niche service for the

foreseeable future, accounting for

3% of mobile connections in 2018 LTE has been launched in Nigeria, South Africa, Tanzania and Uganda, but take-up has been limited.

Roll-out has been constrained by spectrum and regulatory challenges in many markets including

Ghana, Kenya, Nigeria and South Africa. It is of potential interest as a fixed substitute, but LTE is likely

to remain a niche service targeted at high-end data users in urban areas during the forecast period.

Key trends, drivers and assumptions for the mobile market

Figure 6: Summary of key drivers and assumptions for the mobile market, Sub-Saharan Africa [Source: Analysys Mason, 2014]

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Fixed voice connections will

increase only marginally (at a CAGR

of 0.01%); fixed voice revenue will

continue to decline (at a –3.8%

CAGR)

The fixed market in SSA is underdeveloped and underinvested, and will continue to be very small in

comparison to the mobile market. Capital constraints, financial and operational management challenges

at many of the region’s incumbents, consumer preference for prepaid/non-contract services, issues over

rights of way, and the difficulty of achieving positive a RoI outside major urban areas are all factors that

will continue to constrain the fixed market.

Fixed voice connections will only increase marginally during the forecast period, from 11.97 million in

2013 to 11.98 million in 2018. The low growth rate is partly the result of fixed –mobile substitution.

Fixed voice revenue will decline to USD3.1 billion by 2018 (CAGR –3.8%), and will be a decliningcomponent of overall fixed service revenue, which will reach USD6.6 billion by 2018 (CAGR 1.3%). To

place this in context, mobile service revenue will reach USD55.7 billion in 2018 (CAGR 7.7%).

Fixed broadband connections will

grow significantly (at a CAGR of

13.1%), but from a very low base

Fixed broadband growth continues to be strong from a small base, but overall take-up will remain very

low. Population penetration in the region will grow from 0.4% to 0.6% during the forecast period. Fixed

broadband connections will reach 6.75 million in 2018, with nearly half being fixed wireless broadband.

Government-led national broadband plans, coupled with operator investments into fibre networks, will

go some way towards boosting coverage and reducing the cost of services, although most broadband

connections in Africa will still be wireless in 2018.

Fixed wireless’s share of fixedbroadband connections will

increase from 42% in 2013 to 46% in

2018

Fixed wireless is a significant technology in Africa, and is likely to account for the majority of new fixedbroadband connections. We forecast that broadband fixed wireless access (BFWA) connections will

double by 2018, from 1.53 million in 2013, to 3.1 million in 2018.

The share of BFWA of fixed broadband connections has increasingly been driven by WiMAX services,

although in most African markets where WiMAX is in play, there are issues around the high number

(and very small scale and coverage) of WiMAX operators. In some cases, WiMAX licensees are looking

to redeploy their spectrum for LTE, but scale is likely to be a significant constraint.

Key trends, drivers and assumptions for the fixed market

Figure 7: Summary of key drivers and assumptions for the fixed market, Sub-Saharan Africa [Source: Analysys Mason, 2014]

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Key implications and recommendations

Stimulating and monetising use of mobile data Mobile handset data will drive revenue growth through 2018,

reflecting high demand, better service quality and coverage,

competition, and wider availability of lower-priced devices.

Monetising mobile data demand effectively in SSA is a

challenge; price-led competition is a common MNO strategy.

Operators can exploit (and drive) demand by making data

packages more flexible, bearing in mind the preference for

prepaid connections and the significant affordability

constraints, and using innovations like shared data plans.

Funding and monetising fixed broadband development

Most new broadband connections will be wireless, but

extending high-speed fixed broadband services beyond the

enterprise market and the most expensive urban and

suburban neighbourhoods is still a strong revenue objective.

Neighbourhood-level FTTx deployments do not reach themass market, but they can offer useful revenue streams and

test beds for alternative and incumbent operators.

Creative multi-play offers from alternative players such as

Kenya’s Zuku show the way to monetise broadband across a

wider audience.

Creative capex strategies for mobile operators ARPU in Africa is low, and will remain so. Operators wishing

to maximise profitability in this environment must use any

cost sharing or reduction strategies available.

Tower sharing (and the sell-off of tower assets) has been

particularly prevalent in Africa, reflecting the need for

operators to extend coverage across large geographic areas

without incurring excessive costs. Operators who have not

yet explored this avenue should do so.

National (and regional) roaming agreements are alsoimportant.

Driving revenue through digital economy services

Demand-side stimulation strategies will become increasingly

important for operators, as more people in Africa gain access

to the Internet, and to data services generally.

Mobile operators should drive the growing revenue streams

from mobile financial services through additional servicesand partnerships, and partner with players like Facebook to

offer zero-rated or bundled data tied to specific applications.

Using the cellular network for M2M, by working with partners

in a few major verticals such as utilities and automotive is

also a solid opportunity.

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Executive summary

Regional forecasts and cross-country comparison

Individual country forecasts

About the authors and Analysys Mason


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Geographical coverage: We model the seven largest markets, which will

account for 62% of total SSA telecoms service revenue in 2018

Figure 8: Mobile connections by technology generation and fixed broadband household penetration, by country, 2018 [Source: Analysys Mason, 2014] 1

1 For a full list of countries modelled as part of the SSA region, please see the accompanying data annex. Mobile connections exclude M2M connections. Fixed broadband household penetration is

calculated as total fixed broadband connections (residential and business) divided by the number of households.

17

Nigeria Sudan Uganda

Mobile connections by

technology generation

Fixed broadband

household penetration

2011

2G

3G

4G

Year ofLTE launch

74%

Key

Countries modelled individually

Countries modelled as part of the region

Kenya

TanzaniaSouth Africa

Ghana

2014 2% 2014 2%

2014 2%

2012

2015

13%

5%

2012 1%

2013 2%


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Market context: The two most-populated countries – Nigeria and South

Africa – generated 51% of the region’s telecoms retail revenue in 2013

Figure 9: Metrics for Sub-Saharan Africa and the seven SSA countries modelled individually, 2013 [Source: Analysys Mason, 2014]

The economic contribution from the telecoms industry – that is, telecoms revenue as a share of GDP – ranges from 1.9% to 4.9% in

SSA. Overall, SSA’s telecoms revenue, while growing quickly, significantly lags behind that of other regions.

South Africa has the highest mobile SIM penetration (139%), although Nigeria has more mobile SIMs in absolute terms because of

a higher population. South Africa also has by far the highest fixed broadband population penetration rate in the region, although atonly 2.4% at the end of 2013, this is still extremely low by worldwide standards.

Fixed broadband penetration is very low in all of SSA. Operators are increasingly focusing on rolling out both wireless broadband

access and to a more limited extent fibre. Government national broadband initiatives are expected to increase coverage in South

Africa, Nigeria, Tanzania and Uganda, but penetration will remain very limited during the forecast period.

18

Population

(million)

GDP

(USD billion)

GDP per capita

(USD thousand)

Telecoms revenue Population penetration

Total service

revenue

(USD billion)

Share of

GDP

Total retail

revenue

(USD billion)

Retail spend

per capita

(USD per month)

Mobile SIMsFixed

broadband

Ghana 26 50 2 2 3.1% 1 4 106% 0.3%

Kenya 45 45 1 2 4.2% 2 3 67% 0.2%

Nigeria 177 515 3 10 1.9% 8 4 71% 0.2%

South Africa 53 401 8 15 3.7% 14 22 139% 2.4%

Sudan 37 76 2 2 2.5% 1 3 78% 0.5%

Tanzania 50 33 1 2 4.9% 1 2 57% 0.1%

Uganda 38 24 1 1 4.2% 1 2 48% 0.2%

Sub-Saharan Africa 947 1 652 2 49 3.0% 43 4 65% 0.4%


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Fixed and mobile penetration: Mobile handset growth and fixed broadband

growth will be solid in SSA, while fixed voice penetration will decline

Figure 11: Connections by service type, and growth rates, Sub-Saharan

Africa, 2013 –2018 [Source: Analysys Mason, 2014]

Mobile handsets remain the predominant communications

device in SSA. Handset penetration has been strong, driven

by the introduction of low-cost handsets and smartphones.

The number of mobile handset connections (SIMs) will

increase to 885.1 million in 2018, a penetration of 82.5%.

Non-handset mobile broadband will grow strongly at a 17.2%

CAGR, but population penetration will remain low (3.1% in

2018) because of the preference for handset data services.

Fixed services are underpenetrated in SSA and, despite highgrowth, will remain accessible for only a small minority during

the forecast period. Fixed infrastructure is poor and generally

confined to major cities, and competition levels are low.

M2M and IPTV penetration will increase, from a low base.

19

Figure 10: Penetration rate by service type, Sub-Saharan Africa, 2009 –2018

[Source: Analysys Mason, 2014]

Connection typeConnections (million) CAGR

2013 2018 2009 –2013 2013 –2018

Mobile handsets 591.7 885.1 17.1% 8.4%

Mobile broadband 15.2 33.5 44.5% 17.2%

Mobile M2M 5.5 35.4 27.3% 45.3%

Fixed voice 12.0 12.0 –2.0% 0.0%

Fixed broadband 3.6 6.8 23.8% 13.1%

IPTV 0.0 0.3 N/a 129.6%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

1.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

2 0 1 6

2 0 1 7

2 0 1 8

P e r c e n t a g e o f t h e p o p u l a t i o n


Mobile handset Mobile broadband

Mobile M2M Fixed voice

Fixed broadband IPTV


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Mobile penetration: SIM penetration growth will continue in the seven

major markets as affordability and coverage increase

Mobile SIM penetration (excluding M2M) in SSA will increase

from 64% in 2013 to 86% 2018, driven by increasingaffordability of devices and services, and wider coverage.

SSA will have more than 900 million mobile handset and mid-

or large-screen broadband connections by 2018. More than

96% of handset SIMs will still be prepaid.

Other drivers include demographics (almost 250 million

Africans are aged 10 –191 and may acquire a handset during

2013 –2018), and demand for mobile Internet services.

Growth rates will slow in all markets during 2013 –2018

compared to 2009 –2013. They will drop from double- to

single-digit rates in all but one of the seven markets

(Uganda). However, penetration remains well below 100% in

most markets, so significant room for growth remains.

Multiple-SIM ownership makes population penetration look

higher than it really is in most African markets. Users swap

networks to take advantage of on-net rates and promotions.

South Africa has the highest SIM penetration rate in the

region, although much of this is a result of multiple-SIMownership. Tanzania and Uganda are below the regional

average because high proportions of their populations are in

underserved rural areas.

Figure 12: Active mobile SIM penetration by country (excluding M2M),

Sub-Saharan Africa, 2009 –2018 [Source: Analysys Mason, 2014]

1 U.S. Census Bureau (Washington, DC,2013), International Database. Available at

https://www.census.gov/population/international/data/idb/informationGateway.php.

20

0%

20%

40%

60%

80%

100%

120%

140%

160%

2

0 0 9

2

0 1 0

2

0 1 1

2

0 1 2

2

0 1 3

2

0 1 4

2

0 1 5

2

0 1 6

2

0 1 7

2

0 1 8


Ghana Kenya

Nigeria South Africa

Sudan Tanzania

Uganda Sub-Saharan Africa


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Mobile connections: 2G will remain the predominant technology in SSA,

while LTE will account for only 3% of mobile connections in 2018

2G connections are predominant in SSA, and will remain

so during the forecast period. 2G’s share of non-M2Mconnections will decline from more than 85% in 2013 to 74%.

3G’s share of connections will increase from 14% in 2013 to

23% in 2018, which is a relatively slow take-up rate.

Operators are still investing in 3G, but capital constraints,

and coverage and quality issues, will keep penetration low.

Regulators have been holding off on the release of 4G

spectrum in some countries (Ghana and Nigeria) in order

to drive MNOs to improve their 3G coverage and QoS.

3G will be more prevalent in South Africa (at more than

one third of connections) than in other markets in SSA.

LTE has been launched on a small scale in Nigeria, South

Africa, Tanzania and Uganda.

Critical spectrum for LTE services is only expected to be

released in most countries in 2015, after the digital

switchover process has been completed. Some small

WiMAX operators are also considering spectrum re-use forLTE, but scale is likely to be an issue.

LTE will remain niche, confined to high-end data users

(and enterprises) in urban areas in 2013 –2018, accounting

for 3% of non-M2M connections by the end of the period.

Figure 13: Mobile connections by technology generation (excluding M2M),

and 3G and 4G’s share of connections, Sub-Saharan Africa, 2009 –2018[Source: Analysys Mason, 2014]

21

0%

5%

10%

15%

20%

25%

0

100

200

300

400

500

600

700

800

900

1000

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

2 0 1 6

2 0 1 7

2 0 1 8

P e r c e n t a g e o f c o n

n e c t i o n s

C o n n e c t i o n s ( m

i l l i o n )

2G 3G 4G 3G share 4G share


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Smartphones and LTE: Smartphones will account for 26% of handsets in

SSA by 2018, as device prices decline and users upgrade

Most mobile users in SSA use basic or feature phones to

access the mobile network. Smartphones’ share was below10% in 2013 in all markets with the exception of Nigeria

(11%) and South Africa (26%). However, this is changing:

smartphones will account for about 26% of handsets in SSA

by 2018, and more than 50% in South Africa.

Demand for mobile content services (including mobile

financial services, music and m-education) – particularly

among young consumers – is a driver for smartphone take-

up. Average smartphone retail prices remain high relative to

income levels and ARPU. Vendors – including Microsoft(Nokia), Huawei, and ZTE – are working to reduce device

prices to meet affordability levels, with USD25 viewed as the

threshold. Huawei and Mozilla showcased a prototype

USD25 smartphone at Mobile World Congress (MWC) 2014.

Operators continue to stimulate smartphone adoption via

targeted campaigns, promotions on low-cost smartphones,

and bundled data packages. In wealthier markets such as

South Africa, many feature phone users are converting to

low-cost smartphones, as prices come within reach.

LTE-enabled devices remain out of reach for most users.

This trend will continue through the forecast period and

accounts in part for the forecasted low penetration of LTE

(3% in 2018) in the region.

Figure 14: Smartphones as a percentage of handsets, and LTE’s share of

total connections (excluding M2M), Sub-Saharan Africa, 2013 and 2018[Source: Analysys Mason, 2014]

22

2013

2018

Smartphones: 2013

2018

LTE:

0%

2%

4%

6%

8%

10%

12%

0%

10%

20%

30%

40%

50%

60%

G h a n a

K e n y a

N i g e r i a

S o u t h A f r i c a

S u d a n

T a

n z a n i a

U

g a n d a

P e r c e n t a g e

o f c o n n e c t i o n s

P e r c e n t a g e o f h a n d s e t s


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0

2

4

68

10

12

14

16

18

20

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

2 0 1 6

2 0 1 7

2 0 1 8

A R P U ( U S D

p e r m o n t h )

Ghana Kenya


Sudan Tanzania


Mobile ARPU: Decline will slow in most SSA markets, thanks to almost

10% annual growth in handset data ARPU

ARPU in SSA averaged USD6.17 per month in 2013

(excluding M2M), making it well below that of other regions. Itis limited by affordability and the preponderance of prepaid

SIMs and multi-SIM usage. Price competition, often led by

new market entrants, and the impact of MTR cuts, have

driven sustained decline in mobile ARPU in most larger

African markets in recent years. ARPU decline has been

particularly dramatic in South Africa.

South Africa has the highest ARPU in the region – more than

twice that of Ghana, Kenya, Sudan, Tanzania and Uganda.

Nigeria’s mobile ARPU is expected to fall below the regionalaverage from 2014, because of increased price competition.

We forecast a slower rate of decline in most markets, as

operators begin to explore approaches to differentiation other

than price-led competition, and mobile data usage takes hold.

Mobile ARPU across the region will decline at a CAGR of

–2.5% during 2013 –2018, to USD5.44.

South Africa’s ARPU will stabilise, given growing levels of

data consumption and better network coverage and capacity,

as well as the doubling of the take-up rate of smartphones.

Increased smartphone and 3G take-up in the region will be a

significant driver for stabilising ARPU. Growth in handset

data ARPU (at a CAGR of 9.8%) will largely offset declines in

mobile voice ARPU (at a –3.9% CAGR) during 2013 –2018.

Figure 15: Mobile ARPU by country, Sub-Saharan Africa, 2009 –2018


1

1 Mobile ARPU is calculated as total mobile service revenue (retail and wholesale), excluding

M2M, divided by total average mobile connections, excluding M2M.

23


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0

5

10

15

20

25

30

35

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

2 0 1 6

2 0 1 7

2 0 1 8

C o n n e c t i o

n s ( m i l l i o n )

DSL Cable

FTTH/B BFWA

Other fixed broadband Mobile broadband

Fixed voice IPTV

Fixed services: Africa’s small fixed broadband market will increasingly lag

behind the non-handset mobile broadband market

Fixed services in SSA generally offer poor quality at a high

cost, and have ongoing contract requirements that are notappealing to (or affordable for) the mass market. Non-handset

mobile broadband connections will become much more

prevalent than fixed broadband during 2013 –2018 (at a

17.2% CAGR) because of wider coverage and lower cost.

DSL is the dominant fixed broadband technology, but its

share is declining despite growth in connections. We forecast

that DSL connections will increase to 3.05 million in 2018, at

a CAGR of 9.4% during 2013 –2018. FTTx will remain limited

to certain major urban and suburban neighbourhoods.

BFWA connections (including those provided by the region’s

numerous small WiMAX operators) are growing more quickly.

BFWA will surpass DSL in 2018, accounting for 45.9% of

fixed broadband connections, up from 10.5% in 2013.

The fixed voice market is growing more slowly than the fixed

broadband market, because of fixed –mobile substitution.

Multi-play services have been introduced in a few markets (for

example, by alternative service provider Zuku in Kenya), but

their impact on the overall market is limited.

National broadband plans in Nigeria, South Africa, Tanzania

and Uganda may provide expanded high-speed broadband

coverage, and potentially reduce the cost of services.

Figure 16: Fixed broadband connections by type, and fixed voice, IPTV and

mobile broadband connections, Sub-Saharan Africa, 2009 –2018 [Source: Analysys Mason, 2014]

24


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Fixed broadband: Household fixed broadband penetration in SSA varies

significantly by country, and South Africa is well ahead of the others

Penetration of fixed broadband services (including BWFA) is

very low in SSA and plenty of room for growth remains.Household penetration stood at 2.0% in 2013, and will

increase to 3.3% in 2018. Fixed broadband services will

continue to struggle to compete with mobile, given higher

upfront costs, more limited coverage, and lack of mobility.

Fixed broadband providers in Africa have mainly focused

their offerings on the business segment; these customers

tend to be geographically concentrated, and to spend more

and churn less than consumer customers. Providers include

Dark Fibre Africa in South Africa; Liquid Telecom operating innine African countries; and MTN Business with operations in

Botswana, Kenya, Namibia, South Africa and Zambia.

South Africa has significantly higher penetration than other

SSA markets, because of a stronger financial base and

greater customer ability to pay for fixed broadband services,

as well as more competition (for example, from second fixed

broadband provider Neotel). Both incumbent Telkom SA and

challenger Neotel have invested significantly in network build-

out. Fixed broadband household penetration in South Africawill increase from 9.0% to 13.4% by 2018.

The next-most-penetrated market is Sudan, which will still be

below 5% household penetration in 2018; most other markets

will have household penetration of 3% or below.

Figure 17: Fixed broadband penetration of households by country,

Sub-Saharan Africa, 2009 –2018 [Source: Analysys Mason, 2014]1

1 Fixed broadband penetration is calculated as total fixed broadband connections (residential

and business) divided by the number of households.

25

0%

2%

4%

6%

8%

10%

12%

14%

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

2 0 1 6

2 0 1 7

2 0 1 8

P e r c e n t a

g e o f h o u s e h o l d s

Ghana Kenya


Sudan Tanzania



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Fixed broadband and IPTV

Mobile handset data

Fixed voice and narrowband

Mobile messaging

Mobile M2M

Mobile voice

Mobile ARPU

Fixed voice ASPU

Fixed broadband ASPU

Revenue and ARPU: Mobile voice and handset data will drive revenue

growth through 2018, while mobile data will help maintain mobile ARPU

2 Includes USB modem, and mid- and large-screen, but not handset-based data.3 Includes narrowband, VoBB and dial-up Internet access.4 Includes retail and wholesale revenue.


and growth rates, Sub-Saharan Africa, 2013 –2018 [Source: Analysys Mason,

2014]

Figure 18: Telecoms retail revenue by service type, fixed voice and fixed

broadband ASPU, and mobile ARPU, Sub-Saharan Africa, 2009 –2018

[Source: Analysys Mason, 2014]1

26



Telecoms retail revenue will grow slightly more slowly during

2013 –2018 than during 2009 –2013. Higher revenue from

mobile voice and handset data, and fixed broadband and

IPTV, will offset declining revenue from mobile messaging

and fixed voice/narrowband. All ARPU rates will decline.

Mobile handset data’s share of total revenue will almost

double by 2018, reflecting the role of mobile devices as the

main Internet access point for most users in Africa.

Service typeRevenue (USD billion) CAGR

2013 2018 2009 –2013 2013 –2018

Mobile voice 28.3 35.6 6.8% 4.7%

Mobile messaging 2.5 2.2 9.0% –2.7%

Mobile handset data 5.1 12.5 52.0% 19.6%

Mobile broadband2 1.4 2.7 38.3% 14.5%

M2M 0.077 0.485 22.7% 44.6%

Fixed voice and narrowband3 3.7 3.0 –7.2% –4.2%

Fixed broadband and IPTV 0.8 1.2 24.3% 8.7%

Business network services 1.5 2.1 1.1% 7.0%Total retail revenue 43.4 59.9 8.2% 6.7%

Total service revenue4 48.7 65.3 7.0% 6.0%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

0

5

10

15

20

25

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

2 0 1 6

2 0 1 7

2 0 1 8

A R P U / A S

P U

( U S D

p e r m o n t h )

R e v e n

u e ( U S D

b i l l i o n )

S b S h Af i t l k t t d d f t 2013 2018 27


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Ghana3% Kenya

4%

Nigeria20%

South Africa26%

Sudan3%

Tanzania3%

Uganda3%

Rest of SSA38%

Total service

revenue 2018:USD65 billion

Ghana3% Kenya

4%

Nigeria20%

South Africa31%

Sudan4%

Tanzania3%

Uganda2%

Rest of SSA33%

Total servicerevenue 2013:USD49 billion

Service revenue: South Africa’s share will decline slightly, reflecting the

relative maturity of its market





27

Telecoms service revenue in SSA will grow from USD49 billion in 2013 to USD65 billion in 2018, at a 4.5% CAGR.

The distribution of telecoms service revenue by country will remain largely unchanged during the next 5 years, although South

Africa’s share will decline from 31% to 26%, reflecting the greater maturity of (and competition in) its market in comparison with

smaller markets in the region.

S b Saharan Africa telecoms market trends and forecasts 2013 2018 28


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0

24

6

8

10

12

14

16

18

2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018

Ghana Kenya Nigeria South Africa Sudan Tanzania Uganda

R e v e n u e ( U S D

b i l l i o n )

Fixed retail Mobile retail Service revenue (retail and wholesale)

Revenue mix: Mobile revenue will continue to dominate the revenue mix,

and only South Africa will have a significant level of fixed revenue

Figure 22: Telecoms retail revenue by service type, and total service revenue (retail and wholesale), by country, Sub-Saharan Africa, 2013 and 2018 [Source:

Analysys Mason, 2014]

Mobile services’ share of retail revenue will increase from 86.2% in 2013 to 89.5% in 2018. Mobile retail revenue growth will range

from a CAGR of 4.0% in South Africa to 10.0% in Uganda during 2013 –2018. The main drivers will be increased mobile penetration,

wider mobile coverage and smartphone take-up, which will stimulate data usage and spending.

Fixed revenue will grow in all markets except Sudan. CAGRs vary from 0.8% in South Africa to 8.6% in Ghana. Overall growth is

relatively slow, and will be largely driven by increasing demand for fixed broadband connectivity, which remains unaffordable or

inaccessible for many. Total fixed revenue will continue to be a fraction of mobile revenue.

28


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Sub-Saharan Africa telecoms market: trends and forecasts 2013–2018 30


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Ghana: Service revenue will reach GHS3.6 billion (USD1.9 billion) in

2018, driven by handset data, while traditional services remain flat

Service typeRevenue (GHS billion) CAGR

2013 2018 2009 –2013 2013 –2018

Mobile voice 1838.7 1931.9 13.1% 1.0%

Mobile messaging 140.3 149.4 21.6% 1.3%



Mobile M2M 0.000 9.970 N/a N/a




Total service revenue3 2856.9 3597.5 16.5% 4.7%1 Includes USB modem, and mid- and large-screen, but not handset-based data.2 Includes narrowband, VoBB and dial-up Internet access.3 Includes retail and wholesale revenue.

Figure 24: Telecoms retail revenue by service type, total service revenue and

growth rates, Ghana, 2013 –2018 [Source: Analysys Mason, 2014]


(retail and wholesale), Ghana, 2009 –2018 [Source: Analysys Mason, 2014]

Figure 25: Connections by type, and growth rates, Ghana, 2013 –2018


30

4 Not available.


2013 2018 2009 –2013 2013 –2018

Mobile handsets 27.7 36.7 17.1% 5.8%

Mobile broadband 0.3 0.7 81.1% 18.3%

Mobile M2M 0.0 0.5 N/a N/a

Fixed voice 0.3 0.3 1.0% –0.1%


IPTV 0.0 0.0 N/a N/aService revenue (retail and wholesale)



Fixed voice and narrowbandMobile messagingMobile M2MMobile voice

0

500

1000

1500

2000

2500

3000

3500

4000

2 0 0 9

2 0 1 0

2 0 1 1

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2 0 1 6

2 0 1 7

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R e v e n u e

( G H S m i l l i o n )


http://en.wikipedia.org/w/index.php?title=File:Flag_of_Ghana.svg&page=1


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Sub Saharan Africa telecoms market: trends and forecasts 2013 2018


Ghana’s smartphone penetration

will increase from 3% in 2013 to 9%

in 2018 Data-focused strategies from Ghana’s operators including Airtel, MTN, Tigo and Vodafone will involve

them pushing tailored services like mobile money and bundled WhatsApp as well as other apps that can

be accessed on smartphones using zero-rated data.

Reducing the cost of accessing smartphones is an important area of focus for operators. We forecast

that smartphones will account for 9% of handsets by 2018.

Handset data will be the main driver

of mobile revenue growth, growing

at a CAGR of 30.8%

Mobile handset data is driving revenue growth in Ghana, as it is elsewhere in SSA. Drivers of data take-

up include the tripling of smartphone penetration and the increased appeal of mobile services such as

mobile money.

We forecast that handset data revenue will grow at a strong CAGR of 30.8% during 2013 –2018, while

revenue from traditional mobile voice and messaging services will remain flat.

LTE will remain a niche service,

accounting for 4% of mobile

connections in 2018

In 2013, the NCA awarded technologically neutral BWA licences to Surfline, BLU Telecoms (formerly G-

Kwiknet) and Goldkey Properties. Surfline launched FD-LTE services in June 2014 and BLU Telecoms

plans to launch LTE services during 2014. The regulator has no plans to issue further 4G licences in the

near future but is planning to free up spectrum by 2015 following the digital switchover.

We expect 4G/LTE to have a limited impact during the forecast period and remain a niche service – with

only 1.56 million mobile connections (4% of mobile connections) by 2018.

Fixed broadband penetration is

extremely low, but the number of

active lines is increasing, at a

CAGR of 13.5% Incumbent Vodafone Ghana leads the market by far with a market share of more than 90% at the end of

2013. The operator has the most extensive network, with a presence in all the regional capitals.

Lack of competition has almost certainly constrained the market, but Vodafone Ghana’s fixed network

investment of GHS50 million (USD24.5 million) since 2010 has also stimulated market growth.

Fixed broadband connections will grow but will still remain far behind mobile broadband connections.

Ghana: Key trends, drivers and assumptions

Figure 26: Summary of key forecast drivers and assumptions, Ghana [Source: Analysys Mason, 2014]

31




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Sub Saharan Africa telecoms market: trends and forecasts 2013 2018

Ghana – mobile: Fines imposed by the regulator for poor service

quality are likely to drive increased operator investment

Ghana’s mobile market penetration continued to increase,

reaching 105.7% in 2013 (excluding M2M). Significant price-based competition has put downward pressure on retail tariffs

and encouraged multiple-SIM usage.

Operators are increasingly challenged to improve the quality

of their networks, given the increase in network disruptions.

Fines imposed by the regulator for poor QoS are likely to

stimulate further operator investment and consumers will

demand service improvement.

Handset penetration growth is expected to slow down during

the forecast period, reaching 123% in 2018, up from 105% in2013.

LTE will remain a niche service at only 4% penetration of

mobile connections in 2018.

The regulator is holding back on providing further LTE

licences, partly to drive MNO focus on growing 3G usage.

Additional spectrum will be available to operators in 2015

following the completion of the digital switchover.

Strong growth in handset data ARPU (at a CAGR of 22.8%

during 2013 –2018) will be driven by increased penetration of

smartphones and increased adoption of mobile money

services.

Figure 27: Mobile, smartphone and 4G penetration rates, Ghana, 2009 –2018




Figure 28: ARPU rates by type, Ghana, 2009 –2018 [Source: Analysys

Mason, 2014]

32

Including M2M Excluding M2M

Smartphone share of handsets 4G share of SIMs (excluding M2M)

Mobile penetration of population:

0

2

4

6

8

10

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 A R P U

( G H S p e r m o n t h )

Mobile ARPU Handset ARPU Handset data ARPU

0%

20%

40%

60%

80%

100%

120%

140%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

P e r c e n t a g e o f t h e

p o p u l a t i o n , h a n d s e t s

o r S I M s




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Ghana – fixed: The fixed market is well behind the mobile market,

but fixed broadband growth will be steady, driven by BFWA

Fixed penetration is extremely low in Ghana. Fixed voice

population penetration stood at 1.0% in 2013 (4.6% ofhouseholds) while fixed broadband population penetration

stood at 0.3% (1.4% of households). Fixed voice connections

will continue to decline because of fixed –mobile substitution.

Fixed broadband connections will grow at a CAGR of 13.5%.

DSL will remain dominant in the fixed broadband market,

accounting for 80% of fixed broadband connections by 2018.

Fixed wireless technology will remain important. Some of the

WiMAX operators that compete with Vodafone’s DSL

services include Internet Ghana and DiscoveryTel Ghana, butWIMAX services are limited to a few main cities.

In March 2013, the regulator issued three technology-neutral

broadband wireless access licences in the 2.6GHz band. The

new BWA licensees are deploying LTE services instead of

WIMAX. Surfline commercially launched LTE services in

June 2014 and BLU Telecoms plans to launch LTE services

in the latter part of 2014.

We forecast that fixed voice revenue will decline toUSD11 million in 2018 at a CAGR of –6.9%, while fixed

broadband revenue will grow at a CAGR of 12.2% during

2013 –2018.

Figure 29: Fixed penetration rates by service type, Ghana, 2009 –2018


Figure 30: Fixed ASPU rates by service type, Ghana, 2009 –2018 [Source:

Analysys Mason, 2014]

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

A S P U

( G H S p e r m o n t h )

Fixed voice ASPU Fixed broadband ASPU

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

P e r c e n t a g e

o f t h e p o p u l a t i o n

Fixed voice Fixed broadband IPTV




34/63


Kenya: Service revenue will reach KES205.4 billion (USD2.5 billon)

in 2018, driven by handset and non-handset mobile broadband

Service typeRevenue (KES billion) CAGR

2013 2018 2009 –2013 2013 –2018

Mobile voice 77.3 82.6 6.2% 1.3%

Mobile messaging 13.2 13.7 19.4% 0.7%



Mobile M2M 0.168 2.765 N/a 75.1%




Total service revenue3 155.9 205.4 11.6% 5.7%1 Includes USB modem, and mid- and large-screen, but not handset-based data.2 Includes narrowband, VoBB and dial-up Internet access.3 Includes retail and wholesale revenue.

Figure 32: Telecoms retail revenue by service type, total service revenue and

growth rates, Kenya, 2013 –2018 [Source: Analysys Mason, 2014]


(retail and wholesale), Kenya, 2009 –2018 [Source: Analysys Mason, 2014]

Figure 33: Connections by type, and growth rates, Kenya, 2013 –2018


4 Not available.


2013 2018 2009 –2013 2013 –2018

Mobile handsets 29.8 41.6 11.4% 6.9%Mobile broadband 0.3 0.9 140.9% 21.6%

Mobile M2M 0.0 0.7 N/a 70.0%

Fixed voice 0.2 0.2 –26.4% –4.5%


IPTV 0.0 0.0 N/a 24.8%Service revenue (retail and wholesale)



Fixed voice and narrowbandMobile messaging

Mobile M2MMobile voice

0

50

100

150

200

250

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

2 0 1 6

2 0 1 7

2 0 1 8

R e v e n u

e ( K E S b i l l i o n )


http://en.wikipedia.org/w/index.php?title=File:Flag_of_Kenya.svg&page=1


35/63



Increased smartphone penetration

and take-up of mobile value-added

services (VAS) are driving growth

of handset data revenue, at a CAGR

of 14.7%

The introduction of low-cost smartphones and associated data plans is expected to drive an increase in

handset data revenue.

Kenya’s operators are aggressively promoting smartphone take-up – leading operator Safaricom has

stopped selling feature phones and is driving smartphone take-up through the introduction of a low-cost

smartphone Yolo. Other players are expected to follow suit.

Kenya has led the world in adoption of mobile financial services. This has been a major contributor to

the growth of mobile ARPU and has both driven and been driven by mobile handset data adoption.

Safaricom’s high market share of mobile services has been a factor in the success of the M -Pesa

mobile money offering, which is now being replicated across Africa and elsewhere.

We forecast that smartphones will account for 8% of handsets in 2018, driving a CAGR of 14.7% for

handset data revenue in 2013 –2018.

Growth in LTE will be slow and LTE

will only account for 3% of mobile

connections in 2018 LTE has not been deployed in Kenya, because the government is holding on to critical spectrum in

order to drive the construction of an open-access wholesale LTE network via a public private

partnership (PPP) within the 700MHz and 2.6GHz bands by 2015. This strategy is complex and we

foresee delays in the process, which will impact the timing of commercial availability of LTE.

We therefore forecast slow growth in LTE, which will only account for 3% of mobile connections in 2018.

Growth in fixed broadband revenue

will more than compensate for the

decline in fixed voice revenue

Fixed broadband connections are expected to grow at a CAGR of 16.4% because of pent-up demand

for residential broadband services, which will drive growth in fixed broadband revenue.

We forecast that fixed broadband revenue will reach KES7.9 billion (USD94 million) at a CAGR of 8%

during 2013 –2018. This will more than offset the decline in fixed voice revenue, which will decline to

KES0.6 billion (USD7 million) in 2018 at a CAGR of –13.4% during 2013 –2018. Fixed voice revenue

declines are the result of fixed –mobile substitution and lower ARPU for fixed voice services.

Kenya: Key trends, drivers and assumptions

Figure 34: Summary of key drivers and assumptions, Kenya [Source: Analysys Mason, 2014]




36/63


Kenya – mobile: Kenya is the leading country in Africa in terms of

mobile money services, which have driven mobile data growth

Kenya is the economic hub of East Africa, and has a vibrant

ICT market. Mobile SIM penetration reached 67% in 2013

(excluding M2M) and is expected to accelerate in the next 5

years to reach 83% in 2018. Handset penetration stood at

66% in 2013.

Mobile coverage is increasing, making mobile services

more ubiquitous and improving user experience.

Competitive pricing of mobile services (data and voice) is

promoting growth.

LTE will remain a niche service, only accounting for 3% ofconnections in 2018. We do not expect any operator to

launch LTE in the short term because of spectrum

constraints. Both Safaricom and Yu exited Kenya’s proposed

wholesale LTE consortium because of delays in working out

the shareholding details. In the meantime, Safaricom has

demanded its own LTE spectrum. The regulator is unlikely to

agree to this in the near future.

Smartphone penetration will increase from 2% of handsets in

2013 to 8% in 2018, driven by greater availability of low-costsmartphones and demand for mobile data and VAS.

We forecast that handset data ARPU will grow at a CAGR of

7.1% in 2013 –2018, driven by widespread use of mobile

money services and an increase in smartphone penetration.

Figure 35: Mobile, smartphone and 4G penetration rates, Kenya, 2009 –2018




Figure 36: ARPU rates by type, Kenya, 2009 –2018 [Source: Analysys

Mason, 2014]

Including M2M Excluding M2M

Smartphone share of handsets 4G share of SIMs (excluding M2M)

Mobile penetration of population:

0100

200

300

400

500

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 A R P U

( K E S p e r m o n t h )

Mobile ARPU Handset ARPU Handset data ARPU

0%10%20%30%40%50%60%70%80%90%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

P e r c e n t a g e o f t h e

p o p u l a t i o n , h a n d s e t s

o r S I M s



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